Hong Kong stocks retreated from an eight-month high as heightened concerns about the Covid-19 infections hurt sentiment, tempering recent enthusiasm about the arrival of effective vaccines.
The Hang Seng Index fell 0.7 per cent to 26,356.97, ending a three-day rally. The Hang Seng Tech Index of 30 top technology stocks eased 0.9 per cent.
“Once again, rising infection rates and lockdown concerns are the market’s primary focus,” said Stephen Innes, chief global markets strategist at Axi. “Investors are becoming more fearful of the economic damage already done and what will be exerted while waiting for the vaccine roll-out.”
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Benchmark heavyweight Tencent fell 2.7 per cent to HK$573, leading declines among index members. Smartphone lens-maker Sunny Optical shed 2.6 per cent. Chinese online food delivery giant Meituan, which will be added to the Hang Seng Index as a constituent on December 7, dropped 2 per cent.
Increasing new infections and the death toll in the US and Europe is a bit of a concern for the markets, said Louis Tse Ming-kwong, managing director of Wealthy Securities.
“New economy stocks are suffering a bit of selling,” said Tse.
The death toll from Covid-19 in the US passed 250,000 on Wednesday, a day after the country recorded the highest daily fatality in months. New York City’s school district, the largest in the US, will halt in-person learning starting on Thursday.
Rising Covid-19 cases globally has tempered the bullish sentiment, upending a rally in Asia-Pacific and US markets, amid concerns about the economic costs of lockdowns worldwide. The pandemic has infected 55.88 million people and claimed 1.3 million lives to date.
Japan’s Nikkei 225 fell 0.4 per cent as Tokyo raised its pandemic alert to the highest level amid record new cases. Overnight, the Dow Jones Industrial Average and the S&P 500 both eased about 1.2 per cent, while the Nasdaq dropped 0.8 per cent.
In a sign of risk aversion, global funds were willing to pay China to own its newest sovereign bonds. The Ministry of Finance sold about €750 million (US$887 million) of five-year notes at an interest rate of minus 0.15 per cent on Wednesday, its first negative-yielding debt.
The Shanghai Composite, however, gained 0.5 per cent as President Xi Jinping said the country was open to signing more free-trade agreements with other nations.
Stocks related to the Chinese car and domestic appliances sector also got a boost from the State Council’s plan to boost domestic consumption, said Tse.
The State Council, China’s cabinet, on Wednesday said it would roll out plans to introduce new measures to bolster domestic demand, including providing subsidies to trade in used cars and home appliances for new ones and measures to spur rural consumption.
Chinese car stocks rose. Harbin Dongan Auto Engine, which manufactures motors, rose 10 per cent. IKD, which produces parts such as wipers and braking systems, also surged 10 per cent.
Home appliance stocks also rose. Midea Group gained 5.3 per cent, while Gree Electric Appliances added 1.8 per cent. Haier Electronics rose 3.5 per cent.
Sunac Services Holdings, the property management arm of mainland developer Sunac China, gained 21.9 per cent to HK$14.14 from its initial public offering price of HK$11.60 in Hong Kong.
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